LONDON – Gold held steady below $1 700 an ounce on Friday, with prices heading for a third straight weekly fall amid uncertainty over stalled United States budget negotiations to avert a fiscal crisis. Report by Reuters
US President Barack Obama and House of Representatives Speaker John Boehner met for “frank” discussions on Thursday as frustration mounted over a stalemate in talks on the “fiscal cliff”, a $600 billion package of tax hikes and spending cuts due early next year. Investors were wary of taking positions while negotiations were ongoing, and as trading wound down ahead of the year-end.
Signs recession is deepening in the eurozone and an impasse in US budget talks subdued global shares and Europe’s bond markets on Friday, taking some of the shine off a week of mainly steady gains in risk assets.
“Sentiment in gold seems to be changing. Gold seems to be becoming less risk-averse,” said Eugen Weinberg, global head of commodities research at Germany’s Commerzbank.
As the global economy showed signs of recovering, the appetite for gold as a safe haven would recede and demand for industrial metals, including platinum and palladium, would rise, he said.
“The demand for safe haven gold is not as high as it used to be. The short term market participants who used to be very positive on gold, are weighing prospects of investing in riskier assets such as shares and industrial metals,” Weinberg said.
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Spot gold was little changed at $1 693 an ounce against $1 696,69 late on Thursday, headed for a 0,6% weekly drop. US gold was flat at $1 697. Failure to reach agreement on handling the cliff could push the US economy into recession, but averting a crisis would likely benefit gold, which has traded closely with assets seen as higher risk, such as stocks, this year.